If you are looking to invest Rs 1-5 lakhs, you should look at investments that are safe and yield good returns. If you are looking at a longer term tenure of 3-5 years, there are many instruments. Here are a few that you could consider:
Fixed Deposits of Bajaj Finance
The fixed deposits of Bajaj Finance are not a bad bet, if you are looking at a medium term tenure of 3-4 years. A 36-month deposit offers an interest rate of 8.35 per cent, which is not bad at all. If you are looking at a shorter term duration, you can get 8 per cent on a 12-23 month deposit. Senior citizens are entitled to an extra 0.35 per cent.
The deposits are rated AAA, which means they are highly safe. These days even AAA rated deposits may create some fear in the minds of of individuals, therefore, we have recommended Bajaj Finance, which comes with a strong pedigree.
Post office time deposit
Post office time deposit offers an interest rate of 7.7 per cent on a 5-year deposit, which is still better than what most banks in the country are offering.
These deposits are extremely secure as they are post office deposits. However, the interest is not exempted from tax and the income is added to total income for the payment of taxes.
You can open the account in the name of any individual and the account can also be transferred from one post office to the other. While the interest is fully taxable, investors are entitled to tax benefits under Sec80C of the Income Tax Act.
Mahindra Finance offers an interest rate of 8.70 per cent for 33-month and 40-month deposit. If you invest Rs 5000 for 33-month it translates into a sum of Rs 6293. The interest rate is pretty decent and is at least a good 1 to 2 per cent higher, than bank deposits.
Investors who are looking for steady returns, this deposit is not a bad bet. The deposits are rated AAA by the rating agencies. A 40-month deposit under the cumulative scheme can give you a yield of as high as 9.65 per cent.
We suggest that you invest for the short to medium term, as the interest rates are good.
5-Years National Saving Certificates
The 5-years national saving certificates too is not a bad bet at all. The current interest rate on the same is 7.9 per cent. It is important to note that once you invest the interest gets locked for the 5-years.
This investment qualifies for tax benefits under Sec80C of the Income Tax Act. So, if you are investing, do so for the more long term.
The minimum amount that one can invest is Rs 100 and in multiples of Rs 100 only. This investment can be a good bet, if you are a long-term investor.
These deposits are guaranteed by the Government of Kerala and are hence very safe. The interest on the same at the moment is 7.5 per cent only for 1, 2 and 3 year tenure. The interest rate for senior citizens is slightly higher at 7.75 per cent over the same period.
These deposits are extremely safe and hence investors have nothing to worry about.